Fourteen sales agents, many of them pairs of siblings, were charged by the SEC on Tuesday for selling nonexistent securities that promised unrealistic returns and almost nonexistent risk.
The agents illegally sold securities for a Long Island-based investment firm that was not registered with the SEC, but was instead the creator of a $415 million Ponzi scheme. The SEC’s litigation will be led by Paul G. Gizzi and Philip Moustakis.
The sales agents were alleged to have misled investors about securities supposedly offered by Agape World Inc., run by President Nicholas J. Cosmo, who organized the scheme. Falsely promising returns as high as 12%–14%, the agents were also alleged to have told more than 5,000 investors nationwide that risk was minimal on their money, misleading them to believe that only 1% of their principal was at risk.
“This Ponzi scheme spread like wildfire through Long Island’s middle-class communities because this small group of individuals blindly promoted the offerings as particularly safe and profitable,” Andrew M. Calamari, acting regional director for the SEC’s New York regional office, said in a statement. “These sales agents raked in commissions without regard for investors or any apparent concern for Agape’s financial distress and inability to meet investor redemptions.”
Celeste Chase, assistant director of the SEC’s New York regional office, declined to make an additional comment.